Property Rights Attorney Offers
Insight Into "Takings" Legality

CASPER, Wyo. — Karen Budd-Falen, a Wyoming attorney, says the first dictionary written by Daniel Webster has a foreword explaining that he didn't write the dictionary to improve the nation's spelling. He wrote it, he says in the foreword, because the founding fathers were concerned that the courts would start to change the meaning of the terms in the Constitution.

"I thought that was really fascinating," Budd-Falen says.

Most of the words in the first dictionaries in the country define words in the Constitution, like 'taking.'

"In understanding regulatory takings," she says, "you really need to go back and think about the Constitution and the Fifth Amendment. That's where all this really comes from."

That is a key point in dealing with today's Endangered Species Act, she says.

"The whole point of writing those definitions was to make sure the courts did not change what the founding fathers wanted in terms of protecting private property under the Fifth Amendment," Budd-Falen says.

Addressing the Wyoming Stock Growers Association here recently, Budd-Falen said the word 'constitution' means 'foundation.'

"You have the constitution of your house," she said. "It's what your property is built on. It's what your home is built on. The Constitution simply means the foundation of this country, and one of those foundations is the Fifth Amendment of the Constitution."

In the Federalist Papers, she noted, the founding fathers believed that the first 10 amendments to the Constitution were all equal, and that the right to own property was exactly the same as the right to bear arms or the right to free speech or the right of freedom of religion.

"They didn't put them in the one, two, three, four, five order because they felt that any of them was any better or worse than another," Budd-Falen said. "They put them in that order because that was the easiest way to read it."

She said her research leads her to believe that private property was a key issue for the men who created the United States.

"The founding fathers absolutely believed that the ownership and use of private property was the basis for every other freedom that we have in this country," Budd-Falen said. "If we lose the right to own and control private property, the founding fathers believed that we would lose every other Constitutional guarantee we have in this nation."

It's important to understand that, she said, so people will stand up for private property ownership.

The Fifth Amendment said private property shall not be taken for public purpose without due process or just compensation.

"It does not say that the federal government cannot take your property," Budd-Falen pointed out. "It said that the federal government must go through certain steps and certain actions in order to take that property."

The Fifth Amendment talks about a public purpose.

"That's very important when you're taking about regulatory taking," she insisted.

There are two ways the federal government can take control of property. The first way is by physical invasion, where it puts something on the property. The second type is a "regulatory" taking.

"Everybody's heard about Wayne Hage in Nevada," she said. "What happened in that case was that the Forest Service physically took water out of a stream that had been appropriated to Wayne. That's a physical taking."

In a regulatory taking, the government issues such stringent regulations that it stops a use, or the majority of the use of a person's private property.

"When the courts look at that regulatory taking," she said, "the first thing the courts look at is to determine if there is a public purpose."

The question is whether there is a legitamate need for the government to take the property, a legitimate need for the government to regulate the property.

"That public purpose becomes very important," Budd-Falen said.

She said the Supreme Court, in its more recent cases, is finally starting to focus on legitimate need.

"That's going to apply to the states and the state courts as well," Budd-Falen added.

In the California Coastal Commission case, one of the first big cases where the court looked at takings, they told the California Coastal Commission that it didn't have a public purpose.

"What they tried to do in that case is they said, 'This guy owns beachfront property. We're going to make him give a public easement across his property before he can get a building permit to build a home,'" Budd-Falen said. "’Because in California, people aren't all that bright, and if we don't have a public easement, people won't know there's a beach out there, and they won't know there's an ocean after that beach.’ I'm not kidding you. That's what the logic was."

The California Coastal Commission's response was that unless there is a public easement so people can walk to the beach, the public won't know that there is an ocean out there. The CCC claimed that was their public purpose.

"The Supreme Court said, 'It doesn't work that way, guys,'" Budd-Falen said. "’You have to have a legitimate public purpose and your regulations have to be rationally connected to that purpose.’"

The Fifth Amendment also talks about due process.

"That means giving you a day in court," Budd-Falen said. "That's allowing you to be able to go in and present your evidence to an independent arbitor about both the public purpose, legitimate state interest and compensation."

The Fifth Amendment specifically includes just compensation.

"That's being paid for your loss," Budd-Falen explained. "Wyoming's Constitution has language in it that is much the same. Those same kinds of principles are being applied in Wyoming. If you've got a state action and a state taking, those same principles apply."

But it's not as simple as it seems.

"There are a lot of people out there who have private property and think that it's been taken or think that it's been harmed by the federal government," Budd-Falen said. "Even though the Fifth Amendment sounds pretty simple, there are conditional rules that you've got to follow."

One of those rules is that all methods of resolving issues must have been exhausted.

"You've got to try to make use of your property," Budd-Falen said. "For example, if you're talking about an Endangered Species Act problem, now all of a sudden, the Preble's meadow jumping mouse lives in your hay field, and you want to cut your hay, but the Fish and Wildlife Service is telling you, 'Oh, no, if you run your mower across that hay field, you're going to munch a Preble's meadow jumping mouse, and you're going to go to jail.'"

That, in and of itself, Budd-Falen said, is not a taking.

"What the courts are requiring," she said, "is that you attempt to work with the Fish and Wildlife Service and get a Section 10 habitat conservation plan or a Section 7 consultation or do something to be able to use your property."

She admits that there is a lot of red tape involved.

"You have to jump through these kinds of hoops," Budd-Falen said. "If you've got a Preble's meadow jumping mouse on your property, and the Fish and Wildlife Service tells you that you can't cut your hay meadow, then you're going to have to go back to the Fish and Wildlife Service and try to negotiate some kind of mitigation, either giving land somewhere else or paying, frankly, a lot of blackmail money. If the Fish and Wildlife Service still tells you no, that there's no way to mitigate your use of your private property, then you've got a takings case."

She said she sees that more dramatically in wetlands issues.

"I'll bet there isn't a single person who hasn't heard the story about the little guy who's gone out and tried to clean up a wetland and hauled a bunch of tires off of his property and is now in jail," Budd-Falen said. "The reason for that is because the guy didn't try to get a permit in the first place."

The courts are saying, she explains, particularly under the Clean Water Act, that landowners have to get a permit.

"You've got to try to work with the federal government to mitigate whatever concern it is for building on your wetland, for draining a wetland, for filling a wetland before you can claim a taking," Budd-Falen said. "You've got to try to do mitigation."

If all that fails and the government still says no, she said, then the courts will look at the problem.

"Even though the Fifth Amendment doesn't talk about this attempted exhaustion," Budd-Falen said, "or going through all this permitting process, that's what the courts are now requiring. I would strongly urge you not to go out and try to fill your wetland before going to talk to the Corps of Engineers, and don't go out and run over any Preble's meadow jumping mice before you go and try to talk to the U.S. Fish and Wildlife Service."

The other thing the federal government is starting to enforce now in terms of regulatory taking, she said, is "Taking Impact Assessments", or TIAs.

Established by Ronald Reagan when he was President by an executive order, the Taking Implication Assessment is an attempt to determine whether a regulation is going to have an effect on private property.

Budd-Falen said the government, however, does not automatically look at its effect on private property.

"Under the executive order and the Attorney General's guidelines implementing that executive order," Budd-Falen said, "the individual has to request that the federal government look at Taking Implication Assessments. If they don't, they're going to have problems. You've got to request it in the first place."

Budd-Falen said that if ranchers sit on their rights and don't complain or participate when the government usurps those rights, they don't have a case.

"I have a friend who used to say if somebody steals your car and you don't complain about it," Budd-Falen said, "no theft has occurred. When you're talking about federal agency regulations that you believe may have an effect on your private property, you must request that a Takings Implication Assessment be completed."

The thing about the TIA and its enforcement, she said, is that it not only includes private property, but it also includes private property rights.

"That's the right to buy property or sell property or to give that property to your kids through a will or gift or trust or whatever it is," Budd-Falen said. "It also includes investment back expectations."

Investment back expectations, she explains, are those expectations a person may have when investing in improvements.

"You buy your base property and you get a BLM or Forest Service lease," she said. "You do not own that lease. That lease is not your private property. The federal government has to jump through hoops, but they can take that lease and do what they want. But under investment back expectations, what you've done with that lease when you put fences on it, when you put water on it, you've spent money to improve that, hoping someday that you're going to get a return for your investment."

The Attorney General's guidelines define that type of action as an investment back expectation. Under the Attorney General's guidelines, the federal agency has to consider those expectations when it adopts rules and regulations that may affect private property.

"In that way," Budd-Falen said, "there is at least some hope of getting agencies to look at how they affect private property."

She said the Endangered Species Act has also seen some gains in terms of considering private property, especially in critical habitat designation.

"The 10th Circuit Court of Appeals just last March," she said, "has now determined that the Fish and Wildlife Service is mandated to consider the effect on private property when it designates critical habitat."

The Fish and Wildlife Service has to assign dollar figures and values to that private property.

"What the Fish and Wildlife Service tried to argue is that all the harm comes from listing," Budd-Falen said. "None of the harm comes from critical habitat, therefore you're not harmed by endangered species. The court said, 'Give me a break.'"

She said that her favorite line in that court opinion said that just because the Secretary of Interior said it, does not mean it is so.

What the court was saying, she explained, was that the Fish and Wildlife Service does not have to do economic analysis when it lists a species, but when it designates critical habitat, it must consider all economic cost, including those connected with listing, connected with consultations, connected with doing habitat conservation plans as well as the critical habitat itself.

"I think that was really important," Budd-Falen said. "Not only for private property owners, but for the American public as well."

Whether it's right or wrong, she said, the Supreme Court has looked at the Endangered Species Act and said protecting endangered species is in the public interest, and it is something the public should spend money on.

"My concern," Budd-Falen said, "is I don't think the public has got a clue what the Endangered Species Act is costing them in this country. I don't think they have any idea what the Endangered Species Act costs in California because you cannot build an access into a hospital because of one endangered fly, which happens to only live on one little sand hill in California."

With the new 10th Circuit Court ruling, she said, information of those costs will reach the American public.

"I think once the public starts to understand the costs of excess environmental regulation," Budd-Falen said, "we may have the public mind to start changing these regulations. Not so we can go out and run over every endangered species, not so we can pave every wetland, but at least for the public to understand the costs of complying with all these regulations."